When you feel like your credit card debt is keeping you down financially, there are plenty of things you can do, including credit card consolidation. But since you are already in debt, you might be frightened of taking out another loan.
Won’t it hurt your credit card score more? You want to do things to improve that score and improve your finances overall, not harm them further. The good news is that debt consolidation loans have the potential to improve your credit score more than harm them.
Here are some of the reasons why:
You Have Only One Loan
Instead of having lots of debt all over the place, you only have one loan. You take all of your credit cards and add up the debt you have on them.
Then, you get a loan for that amount, being careful to find the best credit card consolidation loan rates. You take the money you get from the loan and you turn around and use it to pay off all of the credit cards.
In the end, you are left with just the one loan–and no more credit cards. As you start to pay down the one loan you have, you will start to see a rebound in that credit score.
Your Debt Is Being Paid
When you are paying the smallest amount possible on lots of little credit cards and other bills, you aren’t really getting anywhere. It will take you years and years to pay off those debts because the interest rates are high and by paying the minimum, you might just be paying for the interest and not much on the actual debt.
When you get a credit card consolidation loan, you are able to start to paying down that debt. You have a much lower interest rate and your debt is actually going down instead of holding steady or even going up. You actually see a reduction in your debt and you can plan out how long it will take for the debt to be completely gone.
You Are Showing Responsibility
Your credit rating is directly related to what debt you have and your history of paying that debt at the agreed upon time. It’s okay to have some debt, as long as you are paying faithfully on it in a responsible manner. That will improve your credit rating a great deal over having many debts that you aren’t paying well.
When you get credit card consolidation done, you are able to pay down the debt on a regular basis and show that you are reliable and responsible with your debts. That is going to start to show up on your credit score so you can fix that score and get a mortgage loan or other help from the bank in the future if you were to need it.
Any Dip Will be Temporary
If you are considering credit card consolidation to help you with your debt, it can lower you monthly payments and your overall interest rates. You can save on what you pay on a monthly basis, and on what you have to pay on the loans overall. While your credit score might take a temporary dip, it will rebound and get much better as you pay regularly on the one and only loan you have left.
That can help you to have a better credit score, afford your debt, and start to pay things off so that you can calculate just how long you have until you are officially debt free. When you see the progress you are making, you will be glad you went with a consolidation loan. Look into the options and see what might work best for your situation.